Lesson 12 - Trade

Question 1

What is trade?

Answer 1

Trade involves the buying + selling of goods + services between nations

Question 2

Why do countries trade?

Answer 2

One does not have the resources/capacity to satisfy its wants and needs

Question 3

What is the simple process that leads to trade?

Answer 3

Specialisation –> Productivity –> Surplus –> Trade

Question 4

What are imports?

Answer 4

Purchase of goods + services from abroad
Outflow of currency from recipient nation

Question 5

What are exports?

Answer 5

Sale of goods + services to other nations
Inflow of currency into seller nation

Question 6

Why does the UK export goods?

Answer 6

Find markets for excess produce that can’t be sold domestically
Sell at higher prices overseas

Question 7

What are the general impacts of exports?

Answer 7

Income + employment opportunities for UK firms
Injection into circular flow

Question 8

Why does the UK import goods?

Answer 8

Goods/services unavailable domestically
Cheaper + higher quality goods abroad
Wide range for consumers

Question 9

What are the general impacts of imports?

Answer 9

Consumers buy cheaper produce, lowers inflation
Firms acquire raw materials, lowering production costs
Leakage from circular flow